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SB-602 Seismic safety: California Earthquake Authority.(2015-2016)

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SB602:v97#DOCUMENT

Amended  IN  Assembly  August 18, 2015
Amended  IN  Assembly  June 17, 2015

CALIFORNIA LEGISLATURE— 2015–2016 REGULAR SESSION

Senate Bill
No. 602

Introduced by Senator Monning

February 27, 2015

An act to amend Section 10089.38 of the Insurance Code, and to amend Sections 5899 and 8503 of the Streets and Highways Code, relating to seismic safety, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


SB 602, as amended, Monning. Seismic safety: California Earthquake Authority.
Existing law establishes the California Earthquake Authority, which is authorized to transact insurance in the state as necessary to sell policies of basic residential earthquake insurance, as provided. Existing law provides that a public purpose will be served by a voluntary contractual assessment program that provides the legislative body of a public agency with the authority to finance the installation of seismic strengthening improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property. For purposes of financing the installation of seismic strengthening improvements, “public agency” means a city, county, or city and county.
This bill would include the California Earthquake Authority as part of the definition of “public agency” for this purpose.
The Improvement Bond Act of 1915, 1915 provides authority for the legislative body of any city to determine that bonds may be issued to pay for specified works of improvement.
This bill would include the California Earthquake Authority as part of the definition of “city” or “municipality” for purposes of this act.
Existing law authorizes the Earthquake Loss Mitigation Fund, a continuously appropriated fund, to be applied to supply grants and loans or loan guarantees to dwelling owners who wish to retrofit their homes to protect against earthquake damage.
This bill would also authorize the money in the fund to be used to fund seismic strengthening improvements permanently fixed to residential, commercial, industrial, agricultural, or other real property, property and an account for related loan losses, and to acquire debt obligations issued to fund these seismic strengthening improvements, thereby making an appropriation. The bill would also require the California Earthquake Authority to establish a loan loss reserve account in the fund for the deposit of moneys to be expended for loan losses incurred in connection with financing seismic strengthening improvements.
This bill would (1) revise or waive certain notice and reporting requirements generally applicable to contractual assessments for contractual assessments that finance seismic strengthening improvements, (2) absent specified conditions, presume statewide scope of any California Earthquake Authority programs of contractual assessments for seismic strengthening improvements, and (3) provide for payment of assessments pursuant to the contractual payment schedule for any California Earthquake Authority program, notwithstanding any bonds secured by those assessments. The bill would require the California Earthquake Authority, prior to entering into a voluntary contractual assessment with a property owner to finance seismic strengthening improvements, to disclose the terms and conditions of the voluntary contractual assessment, and to notify the property owner, in writing, that he or she may be required to pay the remaining principal balance of the voluntary contractual assessment when he or she refinances or sells the property. The bill would specify that the California Earthquake Authority shall require each property owner to sign a document acknowledging his or her receipt of this written disclosure. The bill would also require that seismic strengthening improvements that are permanently fixed to real property and that are financed pursuant to the program comply with all applicable state and local building standards.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 10089.38 of the Insurance Code is amended to read:

10089.38.
 (a)Upon the development and implementation of an economical system satisfactory to the board and the commissioner to prevent misapplication of mitigation funds, money in the Earthquake Loss Mitigation Fund may be applied to all of the following:

(1)

(a) To supply grants and loans or loan guarantees to dwelling owners who wish to retrofit their homes to protect against earthquake damage.

(2)

(b) To fund seismic strengthening improvements and a loan loss reserve account as authorized by Section 5899 of the Streets and Highways Code.

(3)

(c) To acquire debt obligations issued to fund seismic strengthening improvements funded pursuant to paragraph (2) subdivision (b).

SEC. 2.

 Section 5899 of the Streets and Highways Code is amended to read:

5899.
 (a) The Legislature finds and declares all of the following:
(1) It is the intent of the Legislature to address seismic safety needs throughout this state by permitting voluntary individual efforts to improve the seismic safety of homes and buildings. The Legislature further intends that this chapter should be used to finance the installation of seismic strengthening improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property, including, but not limited to, the seismic strengthening of cripple walls and sill plate anchorage of light, wood-framed buildings.
(2) The upfront cost of making residential, commercial, industrial, agricultural, or other real property more seismically safe prevents many property owners from making those improvements. To make those improvements more affordable and to promote the installation of those strengthening improvements, it is necessary to authorize an alternative procedure for authorizing assessments to finance the cost of seismic strengthening improvements.
(3) A public purpose will be served by a voluntary contractual assessment program that provides the legislative body of any public agency with the authority to finance the installation of seismic strengthening improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property.
(b) For purposes of this section, the following terms shall have the following meanings:
(1) For the purpose of financing the installation of seismic strengthening improvements, “public agency” means a city, county, or city and county, or the California Earthquake Authority. The definition of “city” in Section 5005 shall not apply to this paragraph.
(2) “Seismic strengthening improvements” means permanent seismic safety improvements fixed to residential, commercial, industrial, agricultural, or other real property.
(c) The legislative or governing body of a public agency may designate an area, in the manner provided pursuant to Section 5898.20, within which authorized public agency officials and property owners may enter into voluntary contractual assessments to finance the installation of seismic strengthening improvements that are permanently fixed to real property pursuant to this chapter.
(d) For purposes of establishing a voluntary contractual assessment program relating to seismic strengthening improvements, the legislative or governing body shall make the determinations required pursuant to Section 5898.20 by adopting a resolution indicating its intention to do so. The resolution of intention shall identify the kinds of seismic strengthening improvements that may be financed and shall include all of the information that is required pursuant to subdivision (b) of Section 5898.20, including, but not limited to, directing an appropriate public agency official to prepare a report pursuant to Section 5898.22.
(e) For purposes of the report required pursuant to Section 5898.22, relating to a voluntary contractual assessment program for seismic strengthening improvements, the designated public agency official shall satisfy the requirements of paragraph (1) of subdivision (c) of Section 5898.22 by identifying the types of seismic strengthening improvements that may be financed through the use of contractual assessments.
(f) Notwithstanding any other provision of this chapter, upon the written consent of an authorized public agency official, the proposed arrangements for financing the program pertaining to the installation of seismic strengthening improvements that are permanently fixed to real property may authorize the property owner to purchase directly the related equipment and materials for the installation of seismic strengthening improvements and to contract directly for the installation of seismic strengthening improvements that are permanently fixed to the property owner’s residential, commercial, industrial, agricultural, or other real property.
(g) Notwithstanding any other provision of this chapter, and unless otherwise specified in the resolution of intention adopted pursuant to subdivision (d) and the report required by Section 5898.22, the area within which the California Earthquake Authority and property owners may enter into voluntary contractual assessments pursuant to this chapter to finance the installation of seismic strengthening improvements that are permanently fixed to real property shall include the entire state. The California Earthquake Authority shall not be required to designate, describe, or provide a map of that area in the resolution of intention adopted pursuant to subdivision (d), the report required by Section 5898.22, or otherwise, unless that area covers an area smaller than the entire state.
(h) Notwithstanding any other provision of this chapter or any other law, with regard to the establishment of a voluntary contractual assessment program pursuant to this chapter to finance the installation of seismic strengthening improvements that are permanently fixed to real property, the California Earthquake Authority shall be required to publish the notice required by subdivision (a) of Section 5898.24 solely in a newspaper of general circulation within the County of Sacramento.
(i) The California Earthquake Authority shall establish a loan loss reserve account in the Earthquake Loss Mitigation Fund, established pursuant to Section 10089.37 of the Insurance Code, for the deposit of moneys to be expended for loan losses incurred in connection with financing seismic strengthening improvements authorized by this section. The California Earthquake Authority shall develop guidelines and a methodology for determining adequate funding levels for the account sufficient to cover loan losses related to the implementation of the voluntary contractual assessment program pursuant to this section.
(j) Prior to entering into a voluntary contractual assessment with a property owner to finance seismic strengthening improvements under this section, the California Earthquake Authority shall disclose the terms and conditions of the voluntary contractual assessment and notify the property owner, in writing, that he or she may be required to pay the remaining principal balance of the voluntary contractual assessment when he or she refinances or sells the property. The California Earthquake Authority shall require each property owner to sign a document acknowledging his or her receipt of this written disclosure.
(k) The installation of seismic strengthening improvements that are permanently fixed to real property and that are financed pursuant to this chapter shall comply with all applicable state and local building standards.

(i)

(l) Subdivision (b) of Section 5898.24 shall not apply to a voluntary contractual assessment program established pursuant to this chapter solely to finance the installation of seismic strengthening improvements that are permanently fixed to real property.

(j)

(m) Notwithstanding any other provision of this chapter, the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)), or any other law, any voluntary contractual assessment entered into with respect to a program established by the California Earthquake Authority under this chapter shall be made under the payment schedule set forth in the contract providing for that voluntary contractual assessment, whether or not any bonds secured by that voluntary contractual assessment have been issued.

SEC. 3.

 Section 8503 of the Streets and Highways Code is amended to read:

8503.
 “City” includes counties, cities and counties and public corporations, districts and agencies, and the California Earthquake Authority.